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ERP MODULE “FINANCE”
Present by:Maheshwari Ashok
WHAT IS ERP? Enterprise Resource Planning ERP programs are core software used by
companies to coordinate information in every area of the business
ERP programs help to manage company-wide business processes, using a common database and shared management reporting tools.
ERP MODULES
WHAT IS FINANCE? The management of large amounts of
money, especially by governments or large companies.
The science of the management of money and other assets.
The management of money, banking, investments, and credit.
The supplying of funds or capital.
A/F
Customer HR
SCM M/S
Payments
Legal requirements and job information, payroll and benefit expense data
Invoices and credit memos
Sales data and manufacturing cost analysis
Production plans, materials, and inventory data
Sales order data
Cost/profit analysis
Hiring needs and personnel information
WHAT ARE THE I/O ? Input for A/F include:
Payments from customers Account receivable data Account payable data Sales data Production and inventory data Payroll and expense data
Output for A/F include: Payments to suppliers Financial reports Customer credit data
FINANCE Finance is the study of how investors
allocate their assets over time under conditions of certainty and uncertainty.
Finance measures the risks vs. profits and gives an indication of whether the investment is good or not.
Finance can be broken into three different sub categories: public finance corporate finance personal finance
PERSONAL FINANCE Personal finance refers to the financial decisions
which an individual or a family unit is required to make to obtain, budget, save, and spend monetary resources over time, taking into account various financial risks and future life events.
Debit card Employment contract
Commission Employee stock option Health insurance Pay check Salary
Insurance Retirement plan
CORPORATE FINANCE Corporate finance is the area of finance
dealing with monetary decisions that business enterprises make and the tools and analysis used to make these decisions.
The primary goal of corporate finance is to maximize shareholder value.
Balance sheet analysis Financial ratio
Business plan
PUBLIC FINANCE Public finance is the study of the role of the
government in the economy. The purview of public finance is considered to be
threefold: governmental effects on efficient allocation of resources, distribution of income macroeconomic stabilization
Central bank Tax Industrial policy
THE FINANCE MODULE OF MOST ERP SYSTEMS WILL HAVE THE FOLLOWING SUB SYSTEMS
1. FINANCIAL ACCOUNTING for company wide control and integration of
financial information that is essential to strategic decision making.
It provides ability to centrally track financial accounting within an international framework of multiple companies, languages, currencies and charts of accounts.
EXAMPLE OF FINANCIAL ACCOUNTING
2. GENERAL LEDGER The GL is essential both to financial
accounting system and to strategic decision making.
The GL supports all the functions needed in a financial accounting system.
This includes flexible structuring of the chart of accounts at group and company level, distributed application scenarios, real time simultaneous update of sub ledgers and the GL, elimination of time consuming, and parallel views of data in both GL and managerial accounting applications.
EXAMPLE OF GL
EXAMPLE OF GL
3. ACCOUNTS RECEIVABLES records all account postings generated as a
result of Customer sales activity. These postings are automatically updated in
the General Ledger . The Accounts Receivable Module also
integrates with the General ledger, Sales and Distribution, and Cash Management Modules.
EXAMPLE OF ACCOUNTS RECEIVABLES
4.ACCOUNT PAYABLE records account postings generated as a
result of Vendor purchasing activity. Automatic postings are generated in the
General Ledger as well. Payment programs within SAP enables the
payment of payable documents by check, EDI(Electronic Data Interchange), or transfers.
5. ASSET ACCOUNTING for company’s fixed assets management. It is sub ledger to GL, providing detailed
information on asset related transactions. SAP allows you to categorize assets and to
set values for depreciation calculations in each asset class.
Asset accounting also provides integration with plant maintenance for management of machinery and equipment, management of leased assets and assets under construction, and interactive reporting
6. LEGAL CONSOLIDATION Using different valuation methods , company
can plan balance sheet strategies to suit its requirements.
The sub system is closely linked to the financial accounting system, permitting direct data transfer from individual statements into the consolidated statements required by the law
These statements provide an overview of the financial position of the company as a whole
7. CONTROLLING controlling system gathers the functions
required for effective internal cost accounting.
It offers a versatile information system with standard reports and analysis path for the most common questions.
In addition there are features for creating custom reports to supplement standard reports
SAP ERP FINANCIAL BUSINESS BENEFITS Improve financial and managerial
reporting: SAP ERP Financials gives you the flexibility to report
performance by business unit, organization, or cost center.
Improve corporate performance: SAP ERP Financials provides the foundation to
quickly read, evaluate, and respond to changing business conditions with accurate, reconciled and timely financial data.
Achieve faster closes: With SAP ERP Financials, you can streamline
accounting, consolidation, process scheduling, workflow, and collaboration.
SAP ERP FINANCIAL BUSINESS BENEFITS Improve corporate governance and
transparency: SAP ERP Financials provides broader support of
accounting standards, federal regulations, and improved administration of internal controls.
Improve cash flow and liquidity: SAP ERP Financials automates dispute, credit, and
collections management – and offers electronic invoicing and payment capabilities that supplement traditional accounts receivable and accounts payable functions to accelerate and manage cash flow.
Optimize global cash management: With SAP ERP Financials, you can report, analyze, and
allocate cash in real time, and establish in-house banks or payment center.
SAP ERP FINANCIAL BUSINESS BENEFITS Improve process integration between
finance and treasury: With SAP ERP Financials, you can integrate risk
and treasury transactions with core accounting and financial reporting processes.
Reduce overall finance costs: SAP ERP Financials helps you operate effective
shared-services, collaborate with customers or suppliers, and streamline operations to reduce costs and resource demands.
CHARACTERISTICS OR FEATURES OF FINANCE
INVESTMENT OPPORTUNITIES Investment can be done by:-
Creating physical assets with the money (such as development of land, acquiring commercial assets, etc.),
Carrying on business activities (like manufacturing, trading, etc.), and
Acquiring financial securities (such as shares, bonds, units of mutual funds, etc.).
PROFITABLE OPPORTUNITIES In Finance, Profitable opportunities are
considered as an important aspiration (goal). Profitable opportunities signify that the firm
must utilize its available resources most efficiently under the conditions of cut-throat competitive markets
Profitable opportunities shall be a vision. It shall not result in short-term profits at the expense of long-term gains.
OPTIMAL MIX OF FUNDS Finance is concerned with the best optimal
mix of funds in order to obtain the desired and determined results respectively.
Primarily, funds are of two types, namely, Owned funds (Promoter Contribution, Equity
shares, etc.), and Borrowed funds (Bank Loan, Bank overdraft,
Debentures, etc).
SYSTEM OF INTERNAL CONTROLS Finance is concerned with internal controls
maintained in the organisation or workplace. Internal controls are set of rules and
regulations framed at the inception stage of the organisation, and they are altered as per the requirement of its business.
However, these rules and regulations are monitored at various intervals to accomplish the same which have been consistently followed
FUTURE DECISION MAKING Finance is concerned with the future decision
of the organisation.
A "Good Finance” is an indicator of growth and good returns. This is possible only with the good analytical decision of the organisation. However, the decision shall be framed by giving more emphasis on the present and future perspective (economic conditions) respectively.
REFERENCES http://www.thefreedictionary.com/finance http://en.wikipedia.org/wiki/Finance http://www.sap.com/solutions/business-suite/
erp/financials/businessbenefits/index.epx